Bangalore: India Inc Monday urged the government to introduce the Goods and Services Tax (GST) and Direct Tax Code (DTC) to spur economic growth, which has been declining over a year owing to various global and domestic factors.
"Early introduction of GST and DTC can revive the sagging economy and help increase the GDP growth by at least 1.5 percent. Allowing foreign direct investment (FDI) in growth sectors such as multi-brand retail, civil aviation and defence sectors will spur growth," Confederation of Indian Industry (CII) president Adi Godrej said here.
Admitting that declining gross domestic product (GDP) growth rate (6.5 percent) in last fiscal (2011-12) from 8.4 percent in fiscal 2010-11 was a cause for concern, the Godrej group chairman said the sharp fall in the fourth quarter (January-March) to 5.3 percent from 9.2 percent in same quarter of FY 2011 due to poor performance of the manufacturing and agriculture sectors was disturbing.
"Though the GDP growth slumped to 6.9 percent in fiscal 2008-09 due to the global financial crisis, the Indian economy staged a remarkable recovery, thanks to slew of measures, including stimulus the government provided for over two years. The trend, however reversed last fiscal," Godrej told the industry members at an interactive session on 'Agenda for Economic Revival' here.
Representing the manufacturing and services sectors, the confederation has urged the government to go ahead with the twin growth-oriented measures GST and DTC and reforms to attract more domestic and overseas investments in key sectors.
"The much-awaited reforms can act as a macro economic stimulus for growth and help reduce fiscal deficit which is projected at 4.2 percent last fiscal, check inflation and put the country back on the growth path," Godrej asserted.
Regretting the disruption of the current monsoon session of Parliament by opposition lawmakers over contentious issues such as direct allocation of coal blocks to private firms through preferential allotment than auctioning, the veteran industrialist said the standoff was hampering the reform process as several pro-active bills were held up for legislating.
"Parliament has not been working for days due to various reasons. The hold-up is unfortunate and is hampering important legislations that can stimulate growth," Godrej lamented.
As a representative body of India Inc, the CII is working with various state governments across the country to encourage reforms for healthy and uniform growth.
"Though the national GDP was 6.5 percent last fiscal, some states have been growing at double digits. A couple of states like Madhya Pradesh have see double digit growth in the agriculture sector. Rest of the states can emulate and follow the trend," Godrej observed.
Noting that the country had come a long way since the reforms were ushered in early nineties, the India Inc head said though there was no going back on the reform agenda, the problem was the momentum for the new set of reforms had suffered.
"India has progressed well during the last two decades. I hope the downswing in the economy is a cyclical phenomenon and not a systemic problem. The only way forward is to revert to fast-paced reform process," he added.